Tokyo authorities are asking Apple to pay $98 million in back taxes after wrongly exempting foreign tourists and resellers from a consumption tax. Nikkei reports that Apple halted duty-free shopping in June after wrongly exempting bulk orders of iPhones and other hardware.
The $98 million tax bill represents $26 billion in sales in fiscal year 2022 for Apple Japan, and Apple has reportedly filed to amend its tax return. Japan offers tax-free shopping to tourists staying in the country for less than six months, and no tax exemptions are offered to resellers.
“Bulk purchases of iPhones by overseas buyers have been discovered at select Apple stores, a source said,” Nikkei reports. “At least one transaction involves an individual buying hundreds of handsets at once, suggesting the store failed to tax a potential reseller. »
The publication adds that Tokyo tax authorities have lowered tax bills for the same reason on at least two other major retailers since last year. Apple’s 13 billion yen tax bill contributes to more than 100 billion yen in unpaid consumption taxes, Nikkei report, which puts Apple Japan’s tax bill into perspective.
“Japan has made inbound tourism and consumption a centerpiece of its growth strategy since 2012, expanding flight slots and duty-free shopping,” writes Nikkei. “Duty-free shopping, a measure of overseas visitors’ appetite for shopping, set a third consecutive annual record in 2019 at more than 340 billion yen, the Japan Department Stores Association reported. »
Apple CEO Tim Cook spent part of December visiting Japan, oddly enough, to meet with iPhone parts suppliers, including Sony. Japanese permissions have also recently pressured Apple to support multiple iPhone app stores. Apple recently saw a record drop in App Store revenue in Japan and other countries. This problem could be compounded by increased competition, as Apple plans to allow third-party app stores next year from Europe.
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